In July 1938, an English economist Roy Harrod sent John Maynard Keynes his lecture “Scope and Method of Economics” which he intended to deliver as a Presidential Address at one of the sections of the British Association. In his reply, after Keynes complimented Harrod (“it is much the best Presidential Address for many years”) and expressed his concern about its length, he softly scolded him for not sufficiently repelling contemporaries’ increasing attempts “to turn [economics] into a pseudo-natural-science”. Elaborating this point, Keynes wrote:

“Economics is a science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world. It is compelled to be this, because, unlike the typical natural science, the material to which it is applied is, in too many respects, not homogeneous through time. The object of a model is to segregate the semi-permanent or relatively constant factors from those which are transitory or fluctuating so as to develop a logical way of thinking about the latter, and of understanding the time sequences to which they give rise in particular cases. Good economists are scarce because the gift for using “vigilant observation” to choose good models, although it does not require a highly specialised intellectual technique, appears to be a very rare one.In the second place, […] economics is essentially a moral science and not a natural science. That is to say, it employs introspection and judgments of value.” (4 July)

Later in their correspondence, Keynes continued:

“I also want to emphasise strongly the point about economics being a moral science. I mentioned before that it deals with introspection and with values. I might have added that it deals with motives, expectations, psychological uncertainties. One has to be constantly on guard against treating the material as constant and homogeneous in the same way that the material of the other sciences, in spite of its complexity, is constant and homogeneous.” (10 July, 1938)

Reading this Keynes’ definition of economics not only urges mulling over the transformations this discipline has gone through during the last 50 years of the Neoliberal turn, but particularly this reflects how far it has moved away from the ontological essence and methodological wisdom of social science.

3 Responses to What is Economics? Read Keynes’ definition

So even Keynes could get things seriously wrong! “… unlike the typical natural science … not homogeneous through time”. He must be thinking of the laws of physics. The statement is totally wrong about, say, biology – or, on a longer timescale, geology.

Economists need to learn to think *causally*, like natural scientists, i.e. to assemble the various causal processes relevant to the problem in hand, and how they inter-relate – and *then* use models to examine in more detail the operation of a selected few. That way, one can see what is left out of the model. This approach generates much more secure knowledge than the way economists, including many heterodox ones, operate.

Nice article on Keynes’s conception of economy, and its later post Keynes conceptualisation of a human science which was transformed in a code of monetarism to serve a false conception of the freedom of the capitalism of the 21st century.